China loads up on West African oil in March, hitting fresh record


China’s loadings of West African crude oil are set to rise to a new  record in March as the nation
stocks up on medium and heavy oil in the midst of OPEC production  cuts, according to a Reuters survey of shipping
fixtures and oil traders on Wednesday,

Some 1.41 million barrels per day (bpd) of West African oil
are expected to load for China over the coming month,  surpassingFebruary and hitting a fresh high since Reuters began  trackingthe shipments in 2004.

China’s state-run Unipec led the pack, along with Sinochem while the  nation’s independent refineries, known as “teapots”,joined in by  taking cargoes from trading houses such as
Trafigura and Total.

The companies favoured Angola’s medium and heavy oil including  Cabinda, Dalia, Nemba, Plutonio and Saturno, and will also take the  first cargo of Angola’s newest oil grade,Olombendo.

Chinese buyers also booked Congolese Djeno, Ghanaian Jubilee and some  cargoes of Nigerian oil, including Escravos and QuaIboe. Their buying  has pressed the differentials versus dated
Brent for Angola’s crude to unusually high levels, but some
analysts warned that some cargoes could be headed for storage
rather than immediate consumption.

“With seasonal turnarounds, they probably won’t beprocessing it now –  they cannot digest it,” said Ehsan Ul-Haq,
principal consultant with KBC.

He added that the buyers were tempted in part because of astill-narrow  spread between Brent and Dubai crudes DUB-EFS-1M, which makes West  African grades more competitive in Asia, but production cuts from the  Organization of the Petroleum Exporting Countries(OPEC) also led some  to stock up.

OPEC’s compliance with a pledge to cut 1.2 million bpd of production  this year rose to 94 percent last month, taking out mostly medium and  heavy crude grades.

“OPEC cuts are now biting, and Asia is feeling the pain. And in Asia,  the security of supply is important. They have always been willing to  pay a higher price for security of supply,”Ul-Haq said.

Still, the keen Chinese buying was not enough to keep overall West  African flows to Asia supported, and the total
figure slipped to 2.1 million bpd in March, down from 2.31 million bpd  in February.

Indian refineries booked just 14 cargoes to load in March, down from  18 in February. Buyers in Indonesia, Taiwan, Thailand and Malaysia  also purchased smaller amounts of oil for March loading.

COUNTRY     March        BPD ‘000s  February  BPD ‘000s
cargoes                  cargoes
CHINA               46           1,409      40        1,357
INDIA                14           429          18         611
INDONESIA     4            123           3           102
TAIWAN            3            92            2           68
JAPAN               0            0              0         0
S. KOREA         0            0               1         34
OTHERS           2            61             4         136
TOTAL             69          2,115         68        2,307